Japan renewable power supplier subsidies fire electric spending rush

TOKYO -- Japan's subsidies for renewable power suppaliers have sparked more than US$2 billion of investment since they were launched two months ago, as companies and homeowners try to profit from an anti-nuclear energy policy after last year's Fukushima crisis.

That money, the government believes, is only a tiny fraction of what could be a US$640 billion spending boom by 2030 as Japan tries to phase out nuclear energy.

Nuclear reactors supplied about 30 percent of its electricity before Fukushima, but in response to a public backlash, Japan is set to soon announce an overall energy policy which may ultimately mean a total shutdown of atomic capacity.

Renewables — solar, wind, geothermal, biomass and water power — will be called upon to make up part of that shortfall.

A renewable energy law that came into effect on July 1 requires utilities like Tokyo Electric Power Co. and Kyushu Electric Power Co. to buy electricity from renewable sources at pre-set premiums for up to 20 years.

Taking advantage of those premiums are families installing solar panels on their homes to sell power to utility grids, and businesses across the economy buying into the market.

To encourage capacity-building, utilities must pay subsidies as much as 42 yen (US$0.54) per kilowatt hour (kWh) to owners of solar, wind or other renewable energy capacity in this business year, compared with generation cost of about 10 yen per kWh for conventional gas or coal power plants.

That is double the tariff offered in world number one solar market Germany, which this year said it would cut subsidies as it tries to limit the impact of energy prices on consumers.